Monday, December 14, 2009

Economics is about so much more than the pursuit of happiness - Samuelson knew it

Paul Samuelson is dead, at 94.

I feel as I felt when other legends died - bereft.

Of course, he taught me economics - through his great textbook, co-authored in Australia with Keith Hancock and Robert Wallace.  (I was fortunate enough to have Hancock and Wallace teach me in person, so academically I was indeed Samuelson's child).

Here's are two magnificent NYT obituaries.

Two things to add, for now.

One is that two years ago, when Samuelson was 92, he wrote an article observing:

When I come to write a newspaper article like this 10 years from now, I believe America may still be leading the pack in per-capita affluence. But in all probability, the China that has already displaced Japan as the economy with the second biggest total gross domestic product will likely have a total GDP equal to America's.

Full marks for style. Only people who knew his age got the joke.

The other is to point to this 1993 paper "Altruism as a Problem Involving Group versus Individual Selection in Economics and Biology".

The title may not be snappy, but the content...

It influenced me a lot. Many economists still haven't freed themselves to see the world as it is, as Samuelson wants.

An extract:

Mesmerized by Homo economicus, who acts solely on egoism, economists shy away from altruism almost comically. Caught in a shameful act of heroism, they aver: "Shucks, it was only enlightened self interest." Sometimes it is. At other times it may be only rationalization (spurious for card-carrying atheists): "If I rescue somebody's son, someone will rescue mine."

I will not waste ink on face-saving tautologies. When the governess of infants caught in a burning building reenters it unobserved in a hopeless mission of rescue, casuists may argue; "She did it only to get the good feeling of doing it. Because otherwise she wouldn't have done it." Such argumentation (in Wolfgang Pauli's scathing phrase) is not even wrong. It is just boring, irrelevant, and in the technical sense of old-fashioned logical positivism "meaning-less." You do not understand the logic and history of consumer demand theory — Pareto, W. E. Johnson, Slutsky, Allen-Hicks, Hotelling, Samuelson, Houthakker,... — if you think that is its content.

They are some of the most sharpened, lethal, sentences ever used in economic debate.

He wrote well, he thought well, he taught well, and he was usually right.

Samuelson on Altruism

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